Eon slams CMA profit analysis, saying earnings are ‘fair’

Eon UK has said it “fundamentally disagrees” with the Competition and Markets Authority (CMA) investigation’s findings of "excessive profits" made by the big six energy suppliers, and defended its own earnings as “fair.”

Speaking at the Utility Week Congress in Birgmingham today, Eon UK chief executive Tony Cocker said he welcomed many of the CMA’s initial findings, particularly its proposed measures for small businesses. But he said the CMA’s analysis of profits based on return of capital was “inappropriate” for an asset-light business.

Cocker said: “It’s not very complicated to analyise it on the basis of return of sales against similar industries, and actually we have done that and we believe the returns that we earn in the retail business are fair on that basis.”

Fellow big six supplier Centrica has already slammed the CMA’s profits analysis as “unsound”, saying its “concerns are so serious we do not believe the analysis would stand up to rigorous peer review”.

The CMA announced last month that it would be delaying publishing its final findings for at least three months in order to “refine its analysis”, particularly on profit and what constitutes a disengaged customer.

Cocker welcomed the delay to the investigation, saying he would rather the CMA “got the answer right than rush things”.

Last week the CMA said it would undertake further research on barriers to engagement among customers renting their homes.

Cocker echoed calls from other big six suppliers in calling the current proposal of a “backstop” tariff for disengaged customers “disproportionate”.

“You can read the data and take a different view of the same data,” Cocker said.

He added: “If you believe that there are groups of customers that you can’t engage and thereby they suffer, then that for us is social policy and we should work with the government to figure out how we can support those customers, as we already do through the Warm Homes discount.”